Rosberg appeared on course to claim his sixth victory of the season, but crashed into Hamilton as the Briton attempted to pass his Mercedes team-mate around the outside of turn two.

Rosberg sustained damage to his front wing in the incident, allowing Hamilton to assume the lead and subsequent victory, while he could limp home only in fourth.

The collision between the championship protagonists enabled Red Bull's Max Verstappen to claim second with Ferrari driver Kimi Raikkonen taking the last spot on the podium.

Hamilton, who was behind Rosberg courtesy of a curious strategy by his Mercedes team, was closing in on his team-mate in the final stages of the race.

And, on the last lap, he sensed his opportunity on the long run down to turn two. As Hamilton took to the outside, and appeared to move ahead of Rosberg, the German appeared to lose control of his car under braking and slide into his championship rival.

Hamilton was forced off the track, and re-joined temporarily behind Rosberg, but the force of the coming together - the third time the pair have collided this season - saw the German sustain damage to his front wing.

The live feed cut to a furious Mercedes boss Toto Wolff, who thumped his fist on the table as he watched the incident unfold.

Rosberg, now just 11 points ahead of Hamilton in the championship, limped over the line in fourth place.

Wolff described the collision as "brainless".

"It could have been a double DNF," he told Sky Sports F1. "At the moment I do not know what I will say (to Hamilton and Rosberg)."

Wolff and Mercedes chairman Niki Lauda both said Rosberg had suffered a brake problem.

"It was not funny to watch it," said Lauda. "I know that Nico had a brake problem."

Rosberg appeared to point the finger at Hamilton for causing the collision.

"I'm absolutely gutted," he told Sky Sports. "It's unbelievable.

"We were battling and I was struggling a little bit with my brakes.

"I gave Lewis a chance. I had the inside position and I went a bit deep in the corner and I was very surprised that Lewis turned in and that caused the collision."

Unlike on previous occasions this season, pole-sitter Hamilton made no mistake as he led comfortably into turn one.

For a moment, Hamilton took charge of a British one-two as Jenson Button, starting from third - his highest grid slot in nearly two years - made the dream getaway after he passed a slow-starting Nico Hulkenberg.

Rosberg, starting down the order after a gearbox penalty, was up to fifth at the end of lap one, and then third by the time of his first pit stop. Despite Button's best efforts, the Briton began to fall back through the field.

While Rosberg pitted at the end of lap 10, Mercedes waited a further 11 laps before calling in Hamilton - despite Rosberg posting fastest lap times - for a fresh set of rubber. As such, Hamilton emerged behind his team-mate.

Sebastian Vettel, celebrating his 29th birthday, acquired the lead of the race, but it did not last for long. As the four-time champion approached 200 mph on the pit straight his right-rear tyre blew up in catastrophic fashion. Vettel lost control of his car, tapped the pit wall, and came to an unceremonious halt at turn one.

"My rear right exploded, there was nothing I could do," Vettel, who had started his 27th consecutive lap on the ultra-soft - the least durable of the three tyre compounds - said. The safety car was deployed, with rubber from Vettel's Pirelli tyre littering the pit straight.

Rosberg now led with Hamilton hot on his heels, and Verstappen in third place for Red Bull.

The question now was whether either of the Mercedes drivers could make it to the end of the race on their current set of tyres. And the answer came on lap 54, when Hamilton was hauled into the pits or a second stop of the afternoon. Rosberg followed on the ensuing lap.

Verstappen led ahead of Rosberg and Hamilton, but the Mercedes pair, on fresher tyres, made light work of the Red Bull driver.

It was then a straight shoot-out for the win and it looked as Rosberg would hang on to claim his third win on the bounce in Austria before their dramatic last-lap collision.

Hamilton, who celebrated the 250th victory by a British driver, was booed on the podium.